Sydney’s property market has hit 10-year lows, but some suburbs in Sydney’s east actually experienced rent increases by the end of 2018. Let’s look at the suburbs and what caused rents to rise.
Sydney’s property market has hit 10-year lows, but the news isn’t all bad for rental returns in the Eastern Suburbs. A recent report from Domain shows that rents actually rose in some parts of the east in 2018, bringing some good news to local investors in an unstable market.
What's Happening In Sydney's Rental Property Market Now?
As we wrote in our last Quarterly Market Report, Sydney’s property market has now hit its worst point since the GFC, which is wreaking havoc on all aspects of the property market. Sydney rents have fallen for the first time in a decade, with CoreLogic data showing rents down 3% at the end of December 2018.
Shaky market conditions have given tenants the opportunity to negotiate lower rents or look for a new home at a lower rate, driving prices down as investors choose to hold on to great tenants instead of risking long vacancies or unreliable new renters.
But despite this negative news, investors should keep in mind that they are an overall snapshot of the city. Some areas have been affected more than others, while a rare few are still experiencing growth. As always, the balance between supply and demand is a deciding factor, so popular suburbs with low supply will be more likely to stay strong on rent.
Rent Increases In The Eastern Suburbs
According to the Domain report, Coogee tops the list for rental growth for houses in Sydney in 2018, with 23.4% year-on-year growth bringing the median rent to $1370 per week. Bellevue Hill also makes it into the top 10, with 19.8% growth and a new median rent for houses of $2395 pw.
Where units are concerned, the best news is unsurprisingly on the water. Point Piper’s median rent for units is now $995 pw following 10.6% year-on-year growth, while Dover Heights is at $750 pw after growth of 9.5%.
And that’s not the only win out of the report – the Eastern Suburbs only feature once on the top 10 lists of rent decreases, indicating that our area hasn’t been hit quite as hard as others at this stage. The featured suburb is Elizabeth Bay, which came in number 10 on rental decreases for units, with the median price down 5.5% to $520 pw.
What Is Driving Rental Growth In These Suburbs?
With good rental returns few and far between, what is it that’s causing growth in these four Eastern Suburbs? Let’s take a look:
Its beachside location means Coogee is always popular with renters of all types, but housing stock is low. Only 10.6% of properties in Coogee are standalone houses and 9.2% are townhouses (compared to 22.4% and 18.5% for the Eastern Suburbs as a whole), meaning there’s high demand but not much opportunity to secure a house for rent. Add great schools, access to numerous bus lines and all the pros of the Bondi Junction hub and you have a solid investment location that will always have renter interest.
2. Bellevue Hill
There’s a greater supply of houses in this suburb, at 33.8% of all dwellings and 4.5% for townhouses, but it’s an affluent area of town with beautiful large houses that buyers are always willing to pay more for. Schools like Bellevue Hill Public and The Scots College are another drawcard for families, plus great amenities and golf clubs being a key attraction.
3. Point Piper
The housing stock in Point Piper is predominantly units, but the relatively tiny geographical area means the high percentage equated to only 382 apartments in total at the time of the 2016 Census. This high demand is only exacerbated by the opportunity for stunning views over the harbour, whether it’s from your kitchen table or on your weekend coffee run.
4. Dover Heights
This in-demand suburb stretches from Bondi to Vaucluse, so it pulls in renters interested in the coastal lifestyle at a more relaxed pace – and cliff-top views that cannot be beat. Dover Heights feels spacious and uncrowded compared to its neighbours, so it’s been attracting more and more families every year. Only 21.9% of properties here are apartments, so rents still have a chance to grow in line with demand.
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